Reverse Bayesianism and Act Independence

31 Pages Posted: 15 Jun 2020 Last revised: 2 Jun 2022

See all articles by Surajeet Chakravarty

Surajeet Chakravarty

University of Exeter Business School

David Kelsey

University of Exeter Business School - Department of Economics; Nottingham University Business School

Joshua C. Teitelbaum

Georgetown University Law Center

Date Written: May 19, 2020

Abstract

Karni and Vierø (2013) propose a model of belief revision under growing awareness—reverse Bayesianism—which posits that as a person becomes aware of new acts, consequences, or act-consequence links, she revises her beliefs over an expanded state space in a way that preserves the relative likelihoods of events in the original state space. A key feature of the model is that reverse Bayesianism does not fully determine the revised probability distribution. We provide an assumption—act independence—that imposes additional restrictions on reverse Bayesian belief revision. We show that with act independence knowledge of the probabilities of the new act events in the expanded state space is sufficient to fully determine the revised probability distribution in each case of growing awareness. We also explore what additional knowledge is required for reverse Bayesianism to pin down the revised probabilities without act independence.

Keywords: act independence, reverse Bayesianism, safety regulation, unawareness

JEL Classification: D83, K23

Suggested Citation

Chakravarty, Surajeet and Kelsey, David and Teitelbaum, Joshua C., Reverse Bayesianism and Act Independence (May 19, 2020). Journal of Economic Theory, Forthcoming.
(2020). Georgetown Law Faculty Publications and Other Works. 2263, Available at SSRN: https://ssrn.com/abstract=3605584 or http://dx.doi.org/10.2139/ssrn.3605584

Surajeet Chakravarty

University of Exeter Business School ( email )

Xfi Building, Rennes Dr.
Exeter, EX4 4JH
United Kingdom

David Kelsey

University of Exeter Business School - Department of Economics ( email )

Business School North
Nottingham, Nottingham NG7 1AN
United Kingdom
01158467405 (Phone)

HOME PAGE: http://people.exeter.ac.uk/dk210/

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

HOME PAGE: http://https://www.nottingham.ac.uk/business/people/lizdk2.html

Joshua C. Teitelbaum (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue NW
Washington, DC 20001
United States
202-661-6589 (Phone)

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